Transocean Takes $1B Q4 Charge

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Transocean, the world's largest provider of offshore drilling services, said it took a fourth-quarter charge of $1.01 billion as weak demand reduced the value of its shallow-water fleet. On a per share basis, the charge works out to be $3.16. The company is scheduled to deliver fourth-quarter results on Feb. 23.

Switzerland-based Transocean (RIG) said in a statement that the charge is due to projected declines in dayrates and utilization, which adversely impacted its standard jack-up fleet. The charge is based on current estimates and is subject to change, the company said in the statement.

A recent filing by Transocean showed the company had idled 35 jack-up rigs, or more than half its fleet, as of mid-January. The company?s most-sophisticated jack-up rigs rent for more than $150,000 a day, according to Bloomberg News. Jack-up rigs are frequently used for natural gas projects and declining natural gas prices have prompted producers to seek more oil-rich projects, hampering demand for gas drilling equipment and services.

Transocean is expected to earn 93 cents a share after deducting certain gains and losses, according to an average of 35 analysts' estimates compiled by Bloomberg, but that estimate was made prior to the impairment charge announcement.